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STUDENTS CHALLENGING REGULATORY AGENCY PROCEDURES

January 9, 1973

STUDENTS CHALLENGING REGULATORY AGENCY PROCEDURES (S.C.R.A.P.), Plaintiff, and Council on Environmental Quality, Involuntary Plaintiff, and Environmental Defense Fund et al., Plaintiffs-Intervenors,
v.
The UNITED STATES of America and the Interstate Commerce Commission, Defendants, and The Aberdeen and Rockfish Railroad Company et al., Defendants-Intervenors



Per Curiam

I

In December 1971, in response to petitions from the nation's railroads, the Interstate Commerce Commission entered upon an investigation into the adequacy of rail freight rates, in a proceeding hereinafter referred to as Ex Parte No. 281. See Increased Freight Rates and Charges, 1972, 340 I.C.C. 358 (1971). On January 5, 1972, the railroads filed a tariff with the Commission providing for a surcharge of 2.5 per cent on all freight rates, to become effective on February 5. By order dated February 1 the Commission allowed the surcharge to go into effect without suspension, provided the railroads agreed, as they did, that the surcharge would terminate no later than June 5, 1972. Subsequently, on March 17, the railroads filed tariffs providing for selective permanent freight rate increases ranging from 0 to 10 per cent, averaging 4 per cent, which would go into effect on May 1, 1972 and would, at that time, supplant the 2.5 per cent temporary surcharge. As it is authorized to do under the Interstate Commerce Act, the Commission, on April 24, suspended the filed rate increases for the statutory seven-month period until November 30, 1972, and continued its investigation in Ex Parte No. 281. It also extended the 2.5 per cent surcharge until the end of the suspension period.

 SCRAP then brought this action to enjoin enforcement of the Commission's February 1 and April 24 orders. In particular, plaintiff alleged that approval of the 2.5 per cent surcharge constituted major federal action significantly affecting the quality of the human environment which violated the National Environmental Policy Act (NEPA), 42 U.S.C. § 4321 et seq. (1970), since it had not been preceded by an environmental impact statement. The Commission responded by challenging the standing of SCRAP and the jurisdiction of this court. On the merits, counsel for the Commission conceded at oral argument that an environmental impact statement would have to be issued before the permanent selective rate increases could go into effect. Indeed, the court was informed that the Commission was then in the process of preparing an impact statement for the permanent rate increase. The Commission maintained, however, that no impact statement was necessary for the temporary surcharge as it believed that approval of the surcharge was not major federal action significantly affecting the environment.

 Our analysis led us to the conclusion that plaintiff had alleged sufficient concrete interest to obtain standing under the standards established in Sierra Club v. Morton, 405 U.S. 727, 92 S. Ct. 1361, 31 L. Ed. 2d 636 (1972). Jurisdiction was found under both NEPA and the Interstate Commerce Act. We concluded that we were not reviewing the mere failure of the Commission to suspend carrier-made rates, but rather "an order [of the Commission] in which it explicitly found that 'the increases here proposed are just and reasonable,'" and in which the Commission imposed several significant conditions on approval of the rates without suspension. S.C.R.A.P. v. United States, supra, 346 F. Supp. at 196-197. (Emphasis in original.) We therefore reached the merits and held that, even though the surcharge was temporary, it nevertheless was major federal action significantly affecting the environment. Having concluded that the Commission had violated NEPA by not issuing an impact statement prior to approving the surcharge, we then considered the propriety of injunctive relief. Plaintiff requested a preliminary injunction against the entire 2.5 per cent surcharge until an adequate impact statement was prepared, and also asked that we enjoin the Commission from approving the permanent selective rate increase until the Commission issued an adequate statement for that increase.

 For the reasons stated in our earlier opinion in this case, we granted a preliminary injunction against the surcharge only as it applied to recyclable goods. With respect to the permanent selective rate increase, since the Commission had not yet issued its final order approving this increase, and since, as noted above, we had been informed by counsel that the Commission was preparing an environmental impact statement covering this increase, we held that the issue was not then ripe for review. We retained jurisdiction, however, to ensure that the Commission would comply with NEPA and with applicable Council on Environmental Quality (CEQ) Guidelines.

 The railroads and the Commission then sought a stay of our preliminary injunction pending appeal to the Supreme Court of the United States. In its application for a stay to the Chief Justice, acting as Circuit Justice for the District of Columbia Circuit, the Commission again expressly stated that it was then preparing, and would issue, a final environmental impact statement to accompany its approval of the selective rate increase. The Chief Justice, relying on this promise, stated in his opinion denying the stay: "The Commission's study of the proposed selective rate increase is still in progress and will include an environmental impact statement." Aberdeen & Rockfish R. Co. v. S.C.R.A.P., 409 U.S. 1207, 1212, 93 S. Ct. 1, 4, 34 L. Ed. 2d 21 (1972) (Burger, Circuit Justice). (Emphasis added.) The railroads and the Commission then appealed the decision and order of this court, *fn2" and on December 18, 1972 the Supreme Court noted probable jurisdiction and advanced the case on the Court's calendar. See, 409 U.S. 1073, 93 S. Ct. 683, 34 L. Ed. 2d 662 (1972).

 In the meantime, on October 4, 1972 the Commission issued its final report and order in Ex Parte No. 281, approving with some exceptions the increased tariff filed by the railroads. See Increased Freight Rates and Charges, 1972, 341 I.C.C. 290 (1972). Pursuant to the order and the tariff the railroads filed reflecting the order, the selective increases were to take effect on October 23, 1972, at which time they would supplant the 2.5 per cent surcharge which was the object of our earlier injunction, with the exception that the effective date for the rate increases on goods being shipped for purposes of recycling was delayed until November 12, 1972, to permit interested persons to submit their views concerning environmental aspects of the case. Id. at 328.

 Contrary to its representations to this court and to the Chief Justice that it was preparing an environmental impact statement for its approval of the permanent selective rate increase, the Commission failed to prepare any environmental impact statement to accompany its final report and order. The order, though containing some discussion of environmental issues, simply stated that the rate increase would not significantly affect the quality of the human environment and concluded that an extensive formal environmental impact statement was not necessary. See id. at 314.

 On November 7, 1972, before the newly approved rates had gone into effect for goods being shipped for purposes of recycling, but after the new rates took effect for all other goods, SCRAP filed the present motion for a preliminary injunction. SCRAP submits that the Commission's October 4 order is invalid under NEPA and asks that, pending a final hearing and determination of this action, we preliminarily restrain the Commission from permitting, and the railroads from collecting, the rate increases referred to in the Commission's October 4 final report and order.

 On the very same day that plaintiff filed this motion, the Commission responded to the above mentioned petitions. In an order served on November 8, the Commission suspended, until June 10, 1973, the newly approved tariffs in Ex Parte No. 281 as they applied to goods being shipped for purposes of recycling and reopened Ex Parte No. 281 for "the limited purpose of further evaluating, in accordance with [NEPA], the environmental effects of increased railroad freight rates and charges on the movements of commodities being transported for the purpose of recycling * * *." Under the terms of the Commission's final report and order and the tariffs filed by the railroads in response thereto, the temporary 2.5 per cent surcharge on goods shipped for recycling purposes was scheduled to terminate on November 12, 1972. In its November 8 order, however, the Commission reinstated the temporary surcharge until the end of the new suspension period -- that is, until June 9, 1973 -- but at the same time expressly recognized that our July 10, 1972 decision had enjoined the railroads from collecting the surcharge on goods being shipped for purposes of recycling. *fn3"

 We requested SCRAP to file a memorandum concerning the effect of the Commission's November 8 order on the issues raised in its motion for a preliminary injunction. In its memorandum, SCRAP notes that as to all goods other than those being shipped for purposes of recycling, the selective rate increase approved in the Commission's final report and order was not affected by the Commission's November 8 order. These increases went into effect on October 23, 1972 and are presently being collected by the railroads, SCRAP argues that the Commission's approval of the increase as to these goods, though not hindering recycling as does an increase in rates for goods being shipped for recycling, nevertheless constitutes major federal action significantly affecting the environment since increased railroad freight rates will lead some shippers to divert cargo to other, cheaper, means of transport, particularly to trucks, which cause greater pollution and degradation of the environment than rail transport. As to the Commission's November 8 order suspending its October 4 final order as applied to goods being shipped for recycling purposes and reinstating the temporary surcharge subject to our earlier injunction, SCRAP argues that this action represents an attempt by the Commission, in violation of Section 15(7) of the Interstate Commerce Act, 49 U.S.C. § 15(7) (1970), to extend our previous injunction and thus keep it from becoming moot before the Supreme Court of the United States. As SCRAP notes, our preliminary injunction was scheduled to expire along with ...


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